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Certainty of Punishment versus Severity of Punishment- An Experimental Investigation

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Compliance with laws and regulations depends on the expected penalty facing violators. The expected penalty depends on both the probability of punishment and the severity of the punishment if caught. A key question in the economics of crime literature is whether increasing the probability of punishment is a more effective deterrent than an equivalent increase in the severity of punishment. This paper uses laboratory experiments to investigate this issue, and finds that increasing the severity of punishment is a more effective deterrent than an equivalent increase in the probability of punishment. This result contrasts with the findings of the empirical crime literature.

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Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 400.

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Date of creation: 2009
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Handle: RePEc:qld:uq2004:400

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  1. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  2. Jeremy Clark & Lana Friesen & Andrew Muller, 2004. "The Good, the Bad, and the Regulator: An Experimental Test of Two Conditional Audit Schemes," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 42(1), pages 69-87, January.
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  5. Timothy N. Cason & Lata Gangadharan, 2004. "An Experimental Study of Compliance and Leverage in Auditing and Regulatory Enforcement," Department of Economics - Working Papers Series, The University of Melbourne 918, The University of Melbourne.
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  7. James J. Murphy & John K. Stranlund, 2005. "A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement," Working Papers, University of Massachusetts Amherst, Department of Resource Economics 2005-1, University of Massachusetts Amherst, Department of Resource Economics.
  8. Cason, Timothy N. & Gangadharan, Lata, 2006. "Emissions variability in tradable permit markets with imperfect enforcement and banking," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 61(2), pages 199-216, October.
  9. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 47(2), pages 448-74, June.
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  11. Stafford, Sarah L., 2002. "The Effect of Punishment on Firm Compliance with Hazardous Waste Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 290-308, September.
  12. James J. Murphy & John K. Stranlund, 2005. "An Investigation of Voluntary Discovery and Disclosure of Environmental Violations Using Laboratory Experiments," Working Papers, University of Massachusetts Amherst, Department of Resource Economics 2005-7, University of Massachusetts Amherst, Department of Resource Economics.
  13. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
  14. Block, Michael K & Gerety, Vernon E, 1995. "Some Experimental Evidence on Differences between Student and Prisoner Reactions to Monetary Penalties and Risk," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 24(1), pages 123-38, January.
  15. Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, Elsevier, vol. 48(1), pages 21-38, June.
  16. Robin Cubitt & Chris Starmer & Robert Sugden, 1998. "On the Validity of the Random Lottery Incentive System," Experimental Economics, Springer, Springer, vol. 1(2), pages 115-131, September.
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Cited by:
  1. Qin, Xiangdong & Wang, Siyu, 2013. "Using an exogenous mechanism to examine efficient probabilistic punishment," Journal of Economic Psychology, Elsevier, Elsevier, vol. 39(C), pages 1-10.
  2. Lana Friesen & Dietrich Earnhart, 2012. "Environmental Management Responses to Punishment: Specific Deterrence and Certainty versus Severity of Punishment," Discussion Papers Series, School of Economics, University of Queensland, Australia 463, School of Economics, University of Queensland, Australia.

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